Repairing Your Credit After a Foreclosure Or Shortsale

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In a typical foreclosure situation, the house is the last thing the borrower typically stops paying on. Meaning credit cards, cable TV, and family loans all take a backseat to the usual hoops a homeowner goes through in an effort to save their home. It can be compared to catching a knife falling from your kitchen countertop; not a very good idea.

When the foreclosure process is complete; be-it from a short sale or a judicial foreclosure, the former homeowner/s typically have a FICO score of approx. 200 points less than what their credit was prior to their first missed payment. If you or someone you know is in this situation, here are some tips that will exponentially improve a less than remarkable credit score. Along with that, you can also recommend the Blue Water Credit restoration which is a reliable way through which you can improve your credit score.

  1. Do not close Current Accounts

Keep any tradelines (even those in bad standing) below 45% of their maximum allowance. Remember, only 35% of your FICO score is based upon past performance.

2) Do not Apply for New Tradelines

If you already have 3-4 credit tradelines (even those in bad standing) do not apply for new ones. While that might not be worth mentioning it is important to note that unless you have “opted-out”, your credit report can be re-sold and run several times by “credit repair agencies” that will attempt to solicit your business.

3) Be a Joint User

Consider bringing added as a “joint user” (not an authorized user). If you have someone whom you explicitly trust (and who trusts you no less) they can add you to their best tradeline as a joint user (if the creditor permits) which will allow you to ‘absorb’ the entire history of that particular tradeline.

Beware: You will be equally responsible for all payments including purchases made prior to your inclusion, additionally the creditor will be sending a bill to your residence and in your name.

4) Opt-Out

Not so long ago credit reporting agencies began peddling your credit reporting activities to interested parties, and what you thought was one simple credit report can show up a months later as multiple reports being run by multiple companies. Opting-out only takes a few moments and can save you from credit dings caused by too many inquiries.

5) Beware of Credit Card “bail-out” plans

Every day you can hear advertisements on radio and television implying that the government is sponsoring a credit card “bail-out” plan for struggling debtors. There is no credit card bail-out plan – period. Beware especially of any companies asking for advance fees, and ask for referrals.

Hopefully, these tips will help make the credit repair treadmill as easy to bear as possible. Two years is not an unreasonable period of time for most former short sale homeowners to be able to qualify for an FHA loan, while judicial foreclosure can take a while longer.